Correlation Between PWUPW Old and Main Street

Can any of the company-specific risk be diversified away by investing in both PWUPW Old and Main Street at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PWUPW Old and Main Street into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PWUPW Old and Main Street Capital, you can compare the effects of market volatilities on PWUPW Old and Main Street and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PWUPW Old with a short position of Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of PWUPW Old and Main Street.

Diversification Opportunities for PWUPW Old and Main Street

-0.03

Correlation Coefficient

PWUPW Old  Main Street

Good diversification

The 3 months correlation between PWUPW and Main is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding PWUPW Old and Main Street Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Capital and PWUPW Old is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PWUPW Old are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Capital has no effect on the direction of PWUPW Old i.e., PWUPW Old and Main Street go up and down completely randomly.

Pair Corralation between PWUPW Old and Main Street

Assuming the 90 days horizon PWUPW Old is expected to generate 15.53 times more return on investment than Main Street. However, PWUPW Old is 15.53 times more volatile than Main Street Capital. It trades about 0.17 of its potential returns per unit of risk. Main Street Capital is currently generating about 0.0 per unit of risk. If you would invest  3.70  in PWUPW Old on December 28, 2024 and sell it today you would earn a total of  2.85  from holding PWUPW Old or generate 77.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.1%
Values	Daily Returns

PWUPW Old  vs.  Main Street Capital

PWUPW Old

Risk-Adjusted Performance

Good

Over the last 90 days PWUPW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, PWUPW Old showed solid returns over the last few months and may actually be approaching a breakup point.

Main Street Capital

Risk-Adjusted Performance

Weak

Over the last 90 days Main Street Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Main Street is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PWUPW Old and Main Street

The main advantage of trading using opposite PWUPW Old and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PWUPW Old position performs unexpectedly, Main Street can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Main Street will offset losses from the drop in Main Street's long position.

The idea behind PWUPW Old and Main Street Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.